Australian iron ore mining company Fortescue Metals Group (Fortescue) has cut its full year sales forecast by 15 percent to 26 million mt, following heavy rains in the third quarter of the financial year 2009.
Fortescue also said that at $26.21/mt, its cost of production was too high and it needed to focus on improving margins.
"The adverse operating conditions over the March quarter will impact on the full year results as Fortescue will not be able to catch up lost production," the company said.
Fortescue shipped 6.2 million mt of iron ore in the third quarter of FY 2009, marking a slight decrease compared to 6.3 million mt of iron ore in the second quarter of 2009, but below its expectations.
In addition, Fortescue's iron ore mined in the third quarter of the current fiscal year was 6.55 million mt, down 23 percent compared to 8.46 million mt of iron ore mined in the previous quarter.
In the company's announcement of its financial results, Fortescue said its earnings before interest tax, depreciation and amortization (EBITDA) fell to US$75 million in the third quarter of FY 2009 compared to US$193 million in the previous quarter. Also, a 20 percent fall in the revenue of the third quarter of FY 2009 to $US381 million from US$482 million in the previous quarter was more in line with the fall in production, indicating that Fortescue's costs increased over the quarter.
In another statement, Fortescue announced that the approvals were completed for its equity tie-up with China's Hunan Valin Iron and Steel Group.
Accordingly, the Fortescue-Hunan Valin deal has now been completed and Fortescue has issued 260,000,000 shares to Valin following the receipt of US$462 million.
Last week, Fortescue said that it had received the key green light from China's National Development and Reform Commission (NDRC), but still required clearance from Australia's State Administration of Foreign Exchange (SAFE) and the Ministry of Commerce.
Fortescue's executive director Russell Scrimshaw told reporters on the sidelines of a conference in Beijing today, April 29, "The transaction has concluded as of today. It is done, everybody, it is done -- the NDRC, SAFE, and the Ministry of Commerce. The money is in our bank account and they have the chairs on the board."